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This Hot Sector Will Burn Investors

Senior Technology Analyst Eric Bleeker follows up with Chief Technology Officer Jeremy Phillips on a prediction from earlier this year that home-entertainment stocks were due for a crash. Since Eric called out the group on Feb. 14, Rovi, Entropic Communications, and MIPS Technologies have greatly underperformed the Nasdaq as a group, with only MIPS managing to stay close to the index's performance. Back in February, Eric was afraid the group was performing like tablet stocks in early 2011: rising as investors got excited over a new technology trend, only to fall as the year progressed and investors lost faith that the trend would take hold.

As Eric explains, the problem isn't that the home-entertainment field lacks promise; instead, it's that a lot of the growth and profits in expanding home entertainment could be captured by dominant platforms like a future Apple TV or Microsoft’s Xbox. That's similar to tablets, where initial excitement for the industry faded when it became clear Apple was collecting almost all the profits. The important lesson: Just because a technology field is about to grow doesn’t mean investing gains will follow. To see Eric and Jeremy's full thoughts, watch the following video

Apple is the most influential company in technology and has delivered market-smashing returns for those lucky enough to invest in the company. However, with the impending release of the iPhone 5 and Apple TV on the horizon, the stakes have never been higher for the company. If you're looking for a recommendation on how to play Apple along with continuing updates and guidance on the company whenever news breaks, we've created a brand new report that details when to buy and sell Apple. To get started, just click here now.

Author

Eric started at The Motley Fool in 2008 working in the Tech & Telecom sector. Today, he's the General Manager of Fool.com. You can follow him on Twitter to stay up to date with his tech industry analysis. Follow @bleekertech